Senate OKs plan to help Postal Service

The bill would allow cuts in pension costs and pave the way for ending Saturday mail.

Nancy Williamson, a resident of Venice for more than 30 years, heads for… (Jay L. Clendenin, Los Angeles…)

WASHINGTON — The Senate passed a bill aimed at salvaging the United States Postal Service, which is hemorrhaging millions of dollars a day as fewer people send letters and conduct business by mail.

The legislation would allow the postal service to reduce its pension and retiree benefit costs and pave the way for service changes. The bill passed by a vote of 62 to 37 Wednesday, after two days of voting on amendments.

Sen. Joe Lieberman (I-Conn.), one of the bill's sponsors, said it would put the postal service back on course to financial health.

"This great American institution, which still delivers over 560 million pieces of mail every day and helps to support 8 million jobs throughout our economy, cannot be allowed to spiral downward into bankruptcy," he said after the bill passed.

It would open the door to cutting Saturday deliveries, but not for the next two years. It would also impose strict rules governing how the postal service shuts down post offices and mail processing centers, and require it to continue providing local overnight first-class delivery.

The Senate plan also would change the way the service pays into a retiree health benefit fund, ending large upfront contributions. That could save more than $5 billion a year, according to postal service estimates. The change would go into effect four years earlier than originally planned.

The bill also would return to the service $11 billion in excess payments it has made into federal retirement accounts. The money would be used to buy out as many as 100,000 employees and pay down debts.

A plan the service published in February asked Congress for permission to cut six-day delivery starting in 2013, in addition to closing post offices and processing centers. Last year, the service studied closing almost 3,700 post offices. It has not said how many will actually be closed, but those already studied probably would not fall under the new rules.

Despite the Senate action, the service's future remains uncertain. The House now has to act, but its bill differs from the Senate plan and has not yet been introduced on the floor. If Congress does not pass a law, the postal service could start closing processing centers as soon as May 15 and post offices 60 days later. Senators urged the service to extend the moratorium on closures until a final bill passes Congress.

The postal service has long been feeling pressure as more people communicate by email and pay their bills online. The volume of mail delivered has dropped from 213 billion pieces in 2006 to just under 168 billion last year. The use of first-class mail, the most profitable part of the operation, is declining even more quickly.

The postal service lost $5.1 billion in fiscal year 2011, even after Congress allowed it to defer a $5.5-billion contribution to the retirement health benefit fund.

"If the postal service were a private company, we would be engaged in Chapter 11 bankruptcy proceedings," Postmaster General Patrick Donahoe wrote in testimony to a House committee in March.

Although senators disagreed on how much protection to offer rural post offices, they did agree on one point: They approved an amendment by Sen. Rand Paul (R-Ky.) that would close five of seven post offices in the Capitol.